Tariff Trouble: Treasury’s Tales

Dec 13, 2018

Today, the US Treasury reported monthly budget numbers for November. In addition to data about aggregate outlays, revenues, and the deficit, there’s also some interesting data under the hood. Since the US started down a more protectionist policy path following the 2016 Presidential election, we’ve kept a close eye on the line item for customs duties, where the Treasury reports the collection of tariffs (import taxes). This series didn’t start moving much until Q1 of this year, when new taxes on steel, aluminum, and Chinese goods started to really kick in. In the three months ended February, average customs duty revenues ran at a pace of about $3bn (after seasonal adjustment), or $36bn SAAR. By August that number was nearly $4bn, and in November it was nearly $6bn. On a 3m average basis, September-November saw customs duties collected at a pace of 30 bps of GDP. Historically (since this data series begins in 1998) that number typically runs between 15 and 20 bps of GDP, so relative to the size of the economy import tariffs are nearly twice their historic range. Of course, these are still small numbers relative to the total economy. They’re also small relative to US imports, with the September-November period showing customs duties running a bit over 2.3% of total goods import values. Over the last 20 years or so, that number has typically been more around 1.5%. In other words, the tax rate on imports has risen very sharply, but it’s still very small relative to, for example, sales taxes in most states.